Let’s kick off with Dr. Boudreaux reaching back in time to an article on Keynes:
- The Keynesian Diversion (Cafe Hayek)
He quotes Leland Yeager thus:
On rereading the General Theory, I was struck by how much of what Keynes says does resemble the supposedly vulgar Keynesianism of the income-expenditure theory. If Keynes was really a disequilibrium theorist, why did he make so much of the possibility of equilibrium at underemployment? Why did he minimize and practically deny the forces that might conceivably be working, however sluggishly, toward full-employment equilibrium?
and goes on to assert:
Keynes was no brilliant economist, if indeed he can be said to have been an economist at all. He was instead a brilliant public intellectual who knew just enough economics to enable him to transform a decades- (centuries?-)old mistaken understanding of the economy held by business people into “the new economics.”This mistaken understanding is an understandable result of being a businessperson: the greater is the demand for your product, the better is your business. And the better is your business, the more workers you hire and the more of other inputs you buy – thus making your suppliers’ business prospects better, too.
So the key to an economy’s success is high economy-wide – that is, high aggregate – demand. Q.E.D. All that stuff about relative prices, the complementarities and substitutabilities of different sorts of capital goods, the time-structure of production, the quest by entrepreneurs to profit from finding and then filling unfilled human needs – all that stuff collectively amounts to details whose significance pales against the backdrop of aggregate demand.
It’s easy to be a Keynesian – most business people are, and swarms of pseudo-economists long before Keynes were saying largely the same thing that Keynes himself said in 1936. It is, alas, far more difficult to be a real economist.
This of course provokes so much confirmation bias it hurts. Go RTWT.
Next we have Robin Hanson wondering why people throw money at warriors and philosophers when they could be investing in patterns of sustainable specialization and trade instead:
- Academics as warriors (Overcoming Bias)
Why should you be (or buy) a warrior? Wouldn’t the world be better off if there were no warriors, even could be no warriors? Yes, maybe we’d be better off if good property rights would just enforce themselves. But given that there are already other warriors, then it can make sense for you to be (or buy) a warrior, to defend yourself against other warriors. Yes there are some positive side effects, such as increased technical innovation in war-tech related areas. But mostly one wars to block opposing war.
Why should you be (or buy) an academic, such as a philosopher or economist? It seems to me that often the main reason to hire or be an academic is to defend against other academics.
Curiously, Hanson’s idea of an “academic” is a smartassed philosopher:
Consider philosophy. […] When philosophers ridicule a particular sloppy argument, they shame the conclusion that argument had supported, which is then taken as supporting whatever is framed as the obvious alternative conclusion.
For example, imagine you thought that the conclusions of scientists were reliable because they followed a “scientific method.” This creates an opening for a philosopher to point out there there really is no coherent scientific method. Most scientists don’t actually follow most of the supposed scentific methods, and different sciences follow quite different methods. You might then be tempted to conclude that the conclusions of scientists are not reliable at all.
On my side of campus, the academics are themselves scientists. We produce cool shit — and sometimes useful cool shit — rather than churning out resentful baristas.
Tyler Cowen may not be as exasperated with pure-AD vulgar-Keynesianism as Don Boudreaux, but he’s getting closer:
- When will people move away from pure AD theories of unemployment? (Marginal Revolution)
Quoting a Financial Times article behind a paywall:
Commerce department figures on Friday showed that total sales in 2010 were up 6.8 per cent from 2009, marking the sharpest such increase in more than a decade…Industrial output is up by 5.9 per cent year-on-year.
Yet the labor market is still “eh.” Here is more, but again note it is wrong to reject the AD factor altogether, though it seems to be becoming less relevant over time.
I’m starting to think of Aggregate Demand as a simplistic lies-to-children model for very basic macro, much in the same way that my tenth-grade Chem teacher taught us that “an acid is a molecule whose formula starts with an H-“, right up until we got into the organic acids and he had to teach us something more complex.
And at last we come to the post that inspired my title:
In today’s blog post entitled “‘America’s Got Product’ Works to Stem Import Invasion” you advise Americans to “Buy American.” In that post you favorably quote one Chris Kilcullen who warns that “The more money that leaves the country, the less money there is to earn in this country.”
Immediately above your post is a banner ad from Seven Islands/Sept-iles, a region in Quebec, Canada. That region is advertising on your site – and I quote – “Steel Mill Needed in Booming Strategically Located Canadian Port City,” and “Millions of Tons of Iron Ore Shipped Out Yearly,” and my personal favorite “Land, Government Subsidies, Low Energy Cost, and Ideal for Lowest Cost Manufacturing and Distribution.”
Your “Buy American” website is financed in part by U.S. dollars transferred to your organization from Canadians in exchange for advertising space on your site. So what are we to make of Mr. Kilcullen’s warning that dollars that leave America are no longer available to be earned in America?